Foxconn’s 4G License in Taiwan Kicks Off Asia Expansion Plans

By Tim Culpan -
Oct 30, 2013

Foxconn Technology Group’s purchase
of mobile-phone spectrum in Taiwan is the next step in Chairman
Terry Gou’s plan to move past contract manufacturing and become
a global mobile content and services provider.

Ambit Microsystems Corp., a wholly owned unit of Foxconn’s
Hon Hai Precision Industry Co. (2317), paid NT$9.18 billion ($312
million) for 20-megahertz of wireless bandwidth at auction, the
National Communications Commission said yesterday. Winners have
120 days to pay their license fees and are then required to
submit a business plan to the regulator. The successful bid
marks Gou’s first foray into the telecommunications business
since he founded the company 39 years ago.

“Getting a 4G license is part of Foxconn’s long-term plan
to go beyond manufacturing to offer a full range of services,”
Simon Hsing, spokesman for Taipei-based Hon Hai, said in an
interview yesterday. “Taiwan will be a showcase for us to prove
that we can offer integrated hardware, software, content and
services.”

Securing wireless spectrum means Foxconn will set up a 4th-generation mobile-phone services business in Taiwan, adding to a
deal announced in June to develop software and hardware for
Mozilla Corp.’s Firefox mobile operating system. Broadening to
more locations may allow Foxconn to tap into a global market for
mobile data which Bloomberg Industries estimates will grow 50
percent annually until 2018.

Six companies paid a total of NT$118.65 billion for a total
of 135MHz of bandwidth in 12 lots, the NCC said yesterday. The
most-expensive lot was bought by Chunghwa Telecom Co. (2412) for
NT$25.69 billion.

“Foxconn has done very well for a newcomer by securing a
relatively large amount of bandwidth at a good price,” said
Praveen Menon, a Hong Kong-based analyst at Bloomberg
Industries.

Foxconn’s next targets for telecommunications licenses will
probably be in Asia, specifically among Asean markets, Hsing
said. Foxconn is still in talks with the government and local
partners on possible manufacturing investment in Indonesia, he
said.

Foxconn, whose Hon Hai unit gets as much as half its
revenue from making Apple Inc.’s iPhone and iPads, plans to hire
as many as 3,000 software engineers at a research facility in
Kaohsiung, Taiwan, it said in June.

Hon Hai yesterday also announced plans to take a 45 percent
stake in a venture with Hong Kong-based online game developer
NetDragon Websoft Inc. and Shanghai-based private-equity fund
Vision Knight Capital. The $33 million company plans to develop
hardware, software and tablets for China’s education market,
Laura Liu, a spokeswoman for Hon Hai, said.